Jonathan Gruber: 'It Was Just a Mistake'

An Obamacare architect explains a 2012 quote that's fueling critics

July 25, 2014

Did the people who designed Obamacare intend to deprive millions of people of health insurance, just because officials in their states decided not to operate their own insurance marketplaces?

A lawsuit making its way through the federal judiciary, and perhaps on its way to the Supreme Court, claims the answer is yes. And while every federal official and member of Congress who worked on crafting the law in 2009 and 2010 disagrees, now there’s a video from 2012 in which one of the law’s best known advocates and architects—MIT economist Jonathan Gruber—makes the same basic argument that the lawsuit does.

Among those who say they are surprised by the statement is Gruber himself, whom I was able to reach by phone. "I honestly don’t remember why I said that," he said, attempting to reconstruct what he might have been thinking at the time. "I was speaking off-the-cuff. It was just a mistake." As evidence that it was not indicative of his beliefs, he noted that his projections of the law's impact have always assumed that all eligible people would get subsides, even though, he said, he did not assume all states would choose to run their own marketplaces.

Gruber, as you probably know, was a paid technical advisor to the Department of Health and Human Services and an informal advisor to Democrats in Congress. He was also an architect of the Massachusetts reforms, signed into law by then-Governor Mitt Romney, that served more or less as the Affordable Care Act's prototype. The comments from 2012 came during a question-and-answer session, following a lecture he gave at a non-profit research group based outside of Washington. Here’s the key excerpt:

Questioner: You mentioned the health-information [sic] Exchanges for the states, and it is my understanding that if states don’t provide them, then the federal government will provide them for the states.

Gruber: Yeah, so these health-insurance Exchanges, you can go on ma.healthconnector.org and see ours in Massachusetts, will be these new shopping places and they’ll be the place that people go to get their subsidies for health insurance. In the law, it says if the states don’t provide them, the federal backstop will. The federal government has been sort of slow in putting out its backstop, I think partly because they want to sort of squeeze the states to do it. I think what’s important to remember politically about this, is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits. But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it. But you know, once again, the politics can get ugly around this.

Ryan Radia of the Competitive Enterprise Institute published the video, with credit to Rich Weinstein, a commenter at the Volokh Conspiracy blog. Their find is getting a lot of attention—and appropriately so. Among those highlighting it is the Cato Institute's Michael Cannon, the individual who's done more than anybody to craft and advance these lawsuits—which, if successful, could mean that millions of people in states like Florida and Texas would lose the hundreds or even thousands of dollars in tax credits that now make it possible for them to buy health insurance.

(If you want to watch the video for yourself, here it is. The relevant passage starts at about 31:25.)

So, what gives? Gruber, in between sessions at a conference in which he's participating today, told me the following:

I honestly don’t remember why I said that. I was speaking off-the-cuff. It was just a mistake. People make mistakes. Congress made a mistake drafting the law and I made a mistake talking about it.

During this era, at this time, the federal government was trying to encourage as many states as possible to set up their exchanges. ...

At this time, there was also substantial uncertainty about whether the federal backstop would be ready on time for 2014. I might have been thinking that if the federal backstop wasn't ready by 2014, and states hadn't set up their own exchange, there was a risk that citizens couldn't get the tax credits right away. ...

But there was never any intention to literally withhold money, to withhold tax credits, from the states that didn’t take that step. That’s clear in the intent of the law and if you talk to anybody who worked on the law. My subsequent statement was just a speak-o—you know, like a typo.

There are few people who worked as closely with Obama administration and Congress as I did, and at no point was it ever even implied that there’d be differential tax credits based on whether the states set up their own exchange. And that was the basis of all the modeling I did, and that was the basis of any sensible analysis of this law that’s been done by any expert, left and right.

I didn’t assume every state would set up its own exchanges but I assumed that subsidies would be available in every state. It was never contemplated by anybody who modeled or worked on this law that availability of subsides would be conditional of who ran the exchanges.

What do I think? As I’ve written before, I had literally hundreds of conversations with the people writing health care legislation in 2009 and 2010, including quite a few with Gruber. Like other journalists who were following the process closely, I never heard any of them suggest subsidies would not be available in states where officials decided not to operate their own marketplaces—a big deal that, surely, would have come up in conversation.

It’s certainly true that plenty of people who wrote and implemented the law preferred states to be in charge of their own marketplaces—in part, the thinking went, because state officials would have a better feel for the idiosyncrasies of their insurance markets. It's also true that, under the law, states that created their own marketplaces had access to some extra funds to carry out the task. But nobody made threats of withholding subsidies, which were much larger and essential for expanding coverage, as far as I know.

This is some very good reporting and sleuthing by Radia and Weinstein. I obviously can't speak to what Gruber was thinking at the time. But it doesn't change my view that the architects of Obamacare wanted everybody to have subsidies, no matter what decision their state officials made about the marketplaces.